U.S. unemployment claims sink to 684,000 and hit lowest level since pandemic

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The numbers: The number of new applications for unemployment benefits fell below 700,000 in late March for the first time since the onset of the pandemic as the U.S. economy shifted into a higher gear.

Initial jobless claims filed traditionally through the states declined by 97,000 to 684,000 in the week ended March 20, the government said Thursday. Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims would fall to a seasonally adjusted 735,000.

Another 241,745 applications for benefits were filed through a temporary federal-relief program. These numbers are unadjusted.

Combined state and federal jobless claims totaled 898,534 last week, marking the first time they’ve dropped below 1 million since the eruption of the pandemic.

Read: Inflation worries are back. Should you worry?

What happened: New claims fell the most in the states of Illinois, Ohio California, states that have struggled with both widespread fraud and a backlog of applications.

Massachusetts, Virginia and Nevada were the only states with notable increases.

The number of people already collecting traditional unemployment benefits, meanwhile, fell by 264,000 to a seasonally adjusted 3.87 million. That’s the lowest level since last spring and the first time so-called continuing claims have dipped below 4 million.

The decline is not quite as big as it seems, however. An additional 5.55 million people who have exhausted state compensation were reportedly getting temporary benefits through an emergency program funded by the federal government.

Altogether the number of people reportedly receiving benefits from eight separate state and federal programs was reported at an unadjusted 18.9 million by March 6.

By contrast, fewer than 2 million people were getting benefits before the pandemic erupted.

Note to readers: A government review found the number of distinct individuals collecting benefits has been inflated by fraud and double counting.

Widespread fraud, largely in the federal program, has also resulted in estimated $63 billion in improper payments, a Labor Department review concluded. The federal program made self-employed workers eligible for benefits for the very first time, but since most don’t work for a company, it’s easier for scammers to file fraudulent claims.

The big picture: Layoffs are still extremely high one year after the start of the pandemic, but more Americans are expected to return to work in the upcoming months as the coronavirus becomes less of a threat and the economy more fully reopens.

A massive $1.9 trillion federal stimulus package that includes $1,400 checks for most Americans will give the economy an extra boost.

See: A visual look at how an unfair pandemic has reshaped work and home

What they are saying? “Job growth will accelerate substantially in coming months as consumers spend stimulus dollars and unemployment benefits, and the vaccination drive allows the economy to reopen,” said senior economist Bill Adams of PNC Financial Services.

“We’ll still need a few more weeks of data to make it official, but claims should start accelerating down now at a more rapid clip,” said corporate economist Robert Frick of Navy Federal Credit Union. “Dropping infections and deaths are to thank.”

Market reaction: The Dow Jones Industrial Average
DJIA,
-0.56%

and S&P 500
SPX,
-0.40%

fell in Thursday trades.



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